China vows to prevent ‘debt trap’
BEIJING: China yesterday launched a staunch defence of its Belt and Road global infrastructure project (BRI) as it opened a summit with a pledge to ease concerns about debt linked to its signature foreign policy.
President Xi Jinping’s pet project is a reboot of the ancient Silk Road to connect Asia to Europe and Africa through massive investments in maritime, road and rail projects.
The initiative offers to bring much-needed modern infrastructure to developing countries, but the United States has dubbed it a “vanity project” and critics warn it is a “debt trap” favouring Chinese companies.
Huang Kunming, a member of China’s powerful Politburo, said at the opening of the three-day Belt and Road Forum here that there have been “some misunderstandings and unfounded rumours” about BRI that they hope to clear up.
But in a nod to the concerns over loans, Finance Minister Liu Kun said China would release a framework to “prevent debt risks”, according to state-owned China Securities Journal.
The “debt sustainability analysis framework” encourages Chinese financial institutions and BRI countries to improve debt management levels.
China must properly address “issues of environmental protection and debt management that the international community pays close attention to”, said Zheng Zhijie, governor of the China Development Bank.
The state policy bank has doled out much of the BRI-related loans since 2013, with Zheng saying it had extended US$190 billion (RM779 billion) in financing to 600 projects.
International Monetary Fund chief Christine Lagarde said Liu’s announcement and China’s focus on the long-term success of BRI projects were “very welcome steps in the right direction”.
Lagarde told the forum that “sound financial regulation, transparent rules for investment, and attention to fiscal sustainability” were needed to successfully open capital markets, according to her prepared remarks.
Leaders from 37 countries have begun arriving here for the threeday forum.
Russian President Vladimir Putin and Italian Prime Minister Giuseppe Conte, whose country became the first G7 member to sign up to Belt and Road, are among the headliners.
But EU powers Germany and France are sending ministers only, while the United States has not dispatched any officials.
Since Xi launched Belt and Road in 2013, China has invested US$90 billion in projects while banks have provided between US$200 billion and US$300 billion in loans, according to Chinese officials.